Smart technology makes manufacturing anybody’s game in Asia

Alex Teo, Managing Director, Southeast Asia, Siemens Digital Industries Software

The manufacturing supply chain is believed to be disrupted by new players offering a simplified user experience for buyers and access to unlimited, and competitive manufacturing capacity. Siemens Digital Industries Software is winning more than hearts and minds of engineers and buyers, they are exciting the investment community by integrating the virtual and physical, hardware and software, design and manufacturing worlds.

International Metalworking News for Asia wanted to find out more how Siemens foresee the future of manufacturing in Asia, which countries will be the biggest winners in 2020, is ASEAN a real alternative to China, and what is the company providing to help companies as they face the ever-changing manufacturing landscape.

Alex Teo, Managing Director, Southeast Asia, Siemens Digital Industries Software outlined his answers on the four reference questions.

According to Alex, the maturity of manufacturing supply chains in Asia has undoubtedly exerted pressure on the metalworking industry to be more competitive than ever. Across the region, the manufacturing sector has been impacted by ongoing uncertainty in the global market, with manufacturers in major economies slowing output. Manufacturing activity in China contracted for five straight months to October 2019, while Germany and the U.S. dropped to their lowest levels since June 2009.

He explained, “Most markets in Southeast Asia – including Singapore, Malaysia, Vietnam and others – have experienced slow or no growth in PMI, compared to generally favourable outlook across the region for 2018. However, the sector is expected to stabilise and see gradual recovery going in the second half of 2020. New and emerging technology has been credited for fuelling a part of this turnaround. For example, 5G technology could bring a boost to the use of remote robotics or assistive robots, or facilitate greater utility of digital twin technology across a wider spread of operations on the shop floor.”

Alex mentioned that amidst growing uncertainty, enterprises are expected to continue to invest in innovative technology to gain a foothold in the digital economy. IDC’s Asia Pacific DX spending guide forecasts discrete manufacturing (US$83.9 billion) and process manufacturing (US$46.8 billion) to be among the largest spenders on digital transformation initiatives. For both verticals, the top DX spending priority is Smart Manufacturing followed by Digital Supply Chain Optimisation. Smart Manufacturing is supported by significant investments in autonomic operations, manufacturing operations, and quality.

“Besides technology adoption, businesses in the region should also focus on upskilling their workforce to fully realise the benefits of a digital factory. While new technologies possess great autonomy, humans must provide direction and control — apart from overseeing technology, they are needed to gather, compare, analyse and apply data. Integrating AI technology into the current workflow without knowing how to interpret, manage, and act on the insights leaves businesses with just a buzzword that has no real applicable value. There is a need for organisations to develop talent strategies, as well as build up staffing and training plans to meet the changing needs in terms of skills, job description and organisational models of the companies, he said.

Adaptability is key amidst quickly changing global conditions

With the changing conditions, such as rising labour costs and the diversification of consumer demands, some manufacturers have relocated operations to markets such as Vietnam or Thailand. A recent report by property consultancy JLL found that the cost of employing a mid-tech workforce in Thailand and Malaysia is now about 60 percent lower than in China, compared with just 33 percent in 2010.

However, manufacturers should not evaluate their options based on such trends alone. Increasing cost of labour naturally occurs in any developing market, while growing volatility across global markets means that conditions such as taxes and tariffs can change quickly. In the long run, manufacturers need to build competitive operations based on their ability to adapt to rapidly shifting consumer preferences, and customise their products at scale. This can be done by leveraging the right software-driven solutions

Siemens Digital Industries Software continues to work closely with our customers in the different markets to build the right capabilities and support Industry 4.0 development efforts. For example, we launched a Technical Competency Hub in in Penang in 2019, the only such facility in Southeast Asia. The hub will also serve as a platform for Siemens to help companies, especially SMEs, begin their digitalisation journey in order to meet the needs of the new economy.

Alex shared, “We also launched Siemens Intelligent Manufacturing (Chengdu) Innovation Centre this year, a project almost two years in the making. This centre of innovation marries Siemens’ expertise in Industry 4.0 developments with China’s ‘Smart+’ strategy, and marks an important milestone in Siemens’ continued efforts to develop the smart manufacturing ecosystem in China.”

“In the end, staying ahead of the game in manufacturing in Asia-Pacific will not simply be about avoiding market factors such as rising labour costs, or just implementing the latest technology. Businesses seeking to lead the pack in 2020 – and beyond – will need to be able to fully understand their customer, and tap on software-driven solutions to create the right products, for the right markets, at scale,” he finally said.